For the last couple of months I’ve been plagued with wondering if I should stay at my current startup. I’ve been approached with a few different job offers that I haven’t followed up on, and maybe it’s time I pursued greener pastures. In the words of the Clash: should I stay or should I go now?

Indecision

Changing jobs is a big, life altering decision and if you have my knack for risk avoidment it can be a horrendous see-saw of uncertainty. It’s this state of uncertainty that is ultimately the cause of the most unhappiness in your life. Leaving your options open is always less satisfactory than making a firm decision.

Compensation

When comparing offers from other companies, you need to compare the full package which is a lot harder than it looks.

This wiki page does a very good job of explaining how any employee can figure out what their pre-IPO equity is worth. What’s most important is to figure out the percentage of total options and how much funding the options are worth. Don’t forget to include capital gains tax (eg: 40%) when figuring out how much those options are worth.

Business Plan

When will the startup be profitable? How much money has been invested in the company? How much more funding is needed until the startup can stand on its own legs? The more you can find out about this, the better off you’ll be, because you can’t accurately evaluate your monetary compensation and the future of the company without it.

At my previous job I was making more money than I am now, plus there was an average of a 5-8% raise per year. Startups often have no salary increases until they are profitable, or at least have revenue on the books. When you look at the roadmap to profitability you need to factor this in so you can evaluate if the potential payoff if the startup does well comes close to matching the potential revenue lost working at another company.

Bankruptcy

Most startups fail. The most likely outcome of working at a startup is showing up to work one day and finding the doors locked. There may be no compensation package for the newly unemployed workers until they land another job. Waiting for a golden handshake from downsizing is a worse idea than acting on an opportunity that has presented itself at a different company.

Technical Debt

Startups cut corners. You may not have the best tools available to get the job done. You are always squeezed for time and money, which means quality suffers. Poor quality can throw a monkey wrench into schedules, forcing crunch time in order to meet the delivery dates. This technical debt is just like any other debt in that it requires interest payments and you’ll have to pay it off eventually — although project managers often ignore it completely. Steve McConnell covers technical debt in more detail.

Signs of Success

Success should happen early. If things are always running smoothly then the work environment will be enriching and enjoyable. If things never work properly the first time then it can create a big cloud of doom that hangs over the head of everyone in the company and curses the new work being done.

Positive Reinforcement

How are employees reinforced for good work? In a startup, it usually won’t be monetary but that’s ok because one of the best rewards is the time to work on pet projects. Interesting work is its own reward.

Work Experience

Monetary compensation might pay off the bills, but it won’t make you feel as satisfied as a job well done. What makes me happiest is learning/improving new skills and knowing that I’ve done a good job. Having to constantly return to the same project that never works properly is one of the most soul-sucking experiences I’ve ever had. It’s like a bad relationship that drags on and on. You’re trying to make things work, but there’s always something new that comes up and drags you back into old issues that you thought were worked out a long time ago.

“Will I enjoy the work?” is the one of the most important criteria for evaluating a job change, because passion can’t be faked and it’s the only way a job will enrich the rest of your life.

I came to a rather startling discovery in the past month: magazines are just blogs with the added luxury of being able to read them while on the toilet or in the bathtub (but hopefully not both).

I picked up the October issue of Inc. magazine because Joel Spolsky of Joel On Software has joined the magazine. I’m a Joel fan-boy. Internet Duct Tape was inspired by Joel on Software. Here are some random thoughts from spending a rainy Saturday flipping through the pages. Can this possibly be entertaining or of value to my readers? I have no idea.

-1 Editor’s Letter, Contibutors, and Reader Mail: I can’t help but think this stuff should be at the end of a magazine instead of at the front. Below the fold, if you will. Give the reader the most useful tidbits first instead of burying it in the middle.

+1 Netflix vs Blockbuster: Blockbuster proves the adage that startups are R&D for bigger companies by one upping Netflix’s business model. Bad advice from other entrepreneurs follows.

“Netflix should court CDs” – iTunes and digital downloads are already trailblazing the future of this industry, going up against iTunes on their existing strengths isn’t going to help Netflix. Isn’t CD by mail subscription also going up against Columbia House?

“Focus on being #1 service without lowering price” – Good, if obvious, advice.

“Focus on obscure films” – Every company needs to have a passionate minority at their core if they hope to have any success. This would have been good advice if Netflix was starting at a grassroots level, but they already have that core smaller audience from years ago.

“Hookup with a cable company” – I completely agree that they need to move to digital downloads. Always build the product that will kill your current product. But getting in bed with CableCos is courting the devil.

+1 Investor’s Guide to Inc 500: Bug VCs with the previous issue’s top 500 startups list. Bonus points for mentioning Massage Envy masseuse franchises that are a lawsuit waiting to happen. Bill Me Later is my pick from the list. They act as a proxy between your credit card info and other companies for people who are afraid of buying on the Internet. I also like Vocera who do star trek style voice communicators for hospitals.

+1 Even CEOs Have to Apologize for Screwing Over Workers: I appreciate the message, but felt there was a bit too much emphasis on assigning blame for why the bad decisions happened. Kudos for stepping up to the plate, admitting mistakes, and keeping the team in the loop.

+1 Applying Maslow’s Hierarchy of Needs to Companies: Someone’s written a book about the idea that companies need to fulfill more of an employee’s needs than just the paycheck. Interesting: customers are promiscuous meaning that even if they’re perfectly satisfied with service they might still switch to a competitor they’re also perfectly satisfied with. Article is fluffy, wonder if the book goes any deeper? No mention of creating fulfilling work, just increasing employees self-worth and attitudes towards themselves.

Is this like that bogus psychology from the 80s that encouraged self-confidence without merit and created a generation of self-entitled people who don’t understand why life isn’t handing them the success they deserve?

+1 Is My Social Network Startup Worth Investing In? 55 Alive: Investors get to rip into a young startup. Startup wants $250k but most investors are advicing between $1 to $20 million. I love the VC who points out that common interest ties people together, not demographics like age group. We had a conversation about this last night at a dinner party discussing the people you knew in elementary school and high school that you reconnect with but it goes no where — because where you went to school is no indication of common interests. Same guy tells them to generate their own ad revenue without investors.

More good advice that they need to focus on building up local features. So true, what makes social networking sites work is if they become a communication tool for an existing friends group.

+1 Internet Video Beyond YouTube: Some good discussion on interactive webcasts, livecasting, and promotional videos. HelloWorld is officially my favorite company name ever. I’m so surprised there was no mention of Will It Blend or CommonCraft.

+1 Web Polls: Not enough information on the individual web polling companies, but the use cases of how businesses are incorporating them are phenomenal. Conclusion: don’t manage statistics gathering by hand, but be careful who you go with because it can go from $1,000 to $10,000s of dollars.

+1 Using Marketing to Improve Old Business: One man’s guerilla campaign to revitalize the NY Metropolitan Opera. My favorite example of traditional businesses embracing new media is the Brooklyn Museum’s Flickr page. I liked the idea of giving free tickets to the last dress rehearsal to create buzz and simulcasting the operas onto outside monitors.

+1 Questions and Answers: Inc. recommended a survey business support myspace, but ignore Second Life. Unfortunately, no mention of SL’s flying penii. They also give the sage advice that the average person sees 3,000 ads a day so advertisers have to work that much harder to be in the 1% of ads that people notice. Good advice with “do you even know who your audience is?” Huge bonus points for mentioning Made to Stick, one of the best books I’ve ever read.

How to maintain corporate culture: build stories around your brand, have bigger goals than “making money” and fire people who don’t fit with the culture you want to have.

+1 Money Management for Entrepreneurs: Good tip that you should have two financial advisors, one primary and one secondary so that if one doesn’t work out then you can transfer to the other while you look for a replacement.

+1 Pandora Story: Cover story about the Pandora music recommendation service. Turning your customers into fans will help you overcome all kinds of roadblocks. But what about your international customers?

+1 The Way I Work: The best interview question is to find out how someone copes with stress. Article focuses on stress management and using external creativity to unwind — maintaining relationships with your support network is more important than the job.

Overall Score: +7

After an underwhelming start I found some good content in the middle of Inc. Magazine and I’d read it again. Every blog is a self-run small business and every blogger is an entrepreneur, so it isn’t that surprising that I liked the magazine.

“web applications are created as social software where you have a friends list, collaborate on a document with multiple people and it is easily to share information and communicate. The downside is these networks consume a lot of attention and too much time is wasted building profiles and adding friends – for some of these sites building a profile and adding friends is the only utility they have.”

Putting the inherent problems of social web apps aside, how do you build a web app that has traction, gain users and hopefully explodes virally? I’ve been paying attention to this space for far too long and this is a round-up of the tricks and techniques successful and not-so-successful social web applications use to promote themselves.

I’m completely excluding any technique that relies on spending money. It’s a given that you can buy traffic and attention through various mean. Instead, I’m focusing on the self-powered techniques companies can use to build organic buzz and word of mouth advertising around their web application.

Technique #1: Beta Invitations

The easiest way to generate buzz for your social web app is to create an artificial scarcity for applications. You can email invitations to people every day and they won’t give you a second glance, but if invitations are hard to come by then the invitation becomes a valuable commodity instead of easily ignored spam. Gray market economies grow around beta invitation trading, even if the accounts themselves are seldom used.

Beta invite success stories: Gmail, Joost, Pownce

Gotcha: “Blog Friendly” Beta Invitations

The gray market beta invitation economy that you want to generate buzz is built off of the back of bloggers. Invitations are an easy way for bloggers to provide value (or the illusion of value) to their readers at no cost other than time. How bloggers feel about your beta invite campaign, and your application, will come from how easy you make it for them to send out invitations.

Medium lets me invite people by posting a URL on my blog. All of my readers who click on that URL can get into the Medium beta and are added as ‘friends’ with no effort on my part. Compare this to Joost invitations require a cut-and-paste of every email address into a desktop application. Sending a single Joost invitation will take me at least a few minutes because I have to load a desktop application. It could potentially take much longer if the desktop application needs to be updated.

Gotcha: Scarcity of Beta Invitations

One way sites screw up is by giving away too many beta invitations up front. If you are using manipulation to create buzz around your product then you need to create artificial value by implying that the people who have access to your service are more privileged. If anyone and their lolcat can get in then how do you create the false sense of hype that comes from people talking about a product you don’t have access to? It’s like the false economy around diamonds.

Technique #2: Social Engineering Trickery

A social engineering technique that works very well for getting people to accept their user account is to say “your friend created a profile for you!” It’s cheesy but it gets the invited user to sign-up. The easiest way to engage someone’s curiosity is to make it about them. People are always interested in themselves, and in what other people may have said about them.

Gotcha: Leaking Features to Early

The only problem with giving a video demo of a product doesn’t exist is you give your competitors that much more time to copy your features. By the time you release you’re competitive advantage might no longer exist.

Technique #4: The Press Release

I’ll let this video CommonCraft developed for PRWeb discuss the value of press release kits for generating buzz.

Gotcha: Giving Out Your Email Password

Jeff very correctly points out that giving out your email password is ridiculously stupid, since a malicious site can hijack your login information for any website and potentially gain access to your credit card or banking information depending if you use the same email address for everything. There has also been more than one case of startups sending emails to your contacts without your permission (see SixDegrees.com, Quechup and RapLeaf).

Gotcha: Address Book Import with Custom Invite

If you are going to brave the address book import (admittedly I do it often) then it is imperative that the invite sender can customize the message to the invitees. Thanks to the wonder of “automatically add anyone you’ve ever had an email conversation with to your address book” technology, if you do full address book spamming you might be contacting people who have a very loose connection to you. LinkedIn does it right by giving the sender several precanned invitation messages that can be customized at will. Another technique is to limit the number of invitations someone can send at once to prevent spamming.

I had a shock this weekend when I sent Yahoo Mash invitations out and my custom email invitation was never sent — instead they were given that spammy ‘engtech created a profile’ message. I went to the trouble to explain why I was sending the invite, what Yahoo Mash was about, and linked to a TechCrunch article about the service. This is what they saw instead:

Success stories: LinkedIn, Plaxo

Failures: Yahoo Mash, Quechup, RapLeaf, sms.ac…

Technique #6: Leverage Existing Success

In all aspects of life success can breed success. Would Paris Hilton have been in the limelight if she wasn’t the heiress to a ridiculous fortune? When larger companies launch a new web application they need to leverage the success of their existing sites. A common complaint when Google or Yahoo launches something new is that it doesn’t integrate well with their existing portfolio of web applications. Use the success and lessons learned from existing applications to slingshot your new web application into stardom. This is much easier to do when it is the same small team developing the application.

Success stories: 37signals

Technique #7: Corporate Superstar

One of the easiest ways to get buzz about your web app is to hire someone who is well known in the industry. This can be a detrimental factor because their involvement can overshadow the product itself or bring too much attention to a product before it has had a chance to mature. However, I think there is always more of a positive factor because it is easier to improve a product than it is to build the kind of buzz these people bring to anything they are involved with.

Technique #8: Send Out the Bacn

Social sites try to keep you interested by sending ‘tickler’ emails whenever any little action happens related to your account on their site. These emails are functionally useless, but they drive you back to the site. It’s not spam, it’s bacn — useless emails from a website that you’ve given permission to contact you. It’s the worst form of permission marketing and smart sites will set a sane default where they only contact the person once a day at the very most. Stupid sites will quickly see their emails detected as spam since clicking the ‘Report Spam’ button is often much easier than creating an email filter or finding out how to unsubscribe or change notifications.

Very few sites get that if you’re going to email someone that they have a message, you might as well include the message with the email. Even fewer sites understand that people should be able to respond to the message directly from email. Improving the customer experience always trumps increasing page views or any other metric.

Sites that get it: Twitter, StumbleUpon

Sites that don’t get it: Facebook, Yahoo Mash

Technique: Don’t Require an Account to Try It

(update because I forgot it the first time around)

One of the absolutely best ways to promote your app is to let people use it without requiring an account to sign in. OpenID hopes to provide a universal account that you can use anywhere, but other sites like Geni and JottIt bring you directly to the application and only prompt you to create a user account when you want to store your information.

Technique #9: Solve a Problem

The easiest way to build buzz around your web app is to solve a real problem. Many “web 2.0″ sites are repeating what has been available in desktop software for decades. For the ones that do something original, it often serves no real purpose. Messaging friends? I have email and instant messenger programs. Writing documents, spreadsheets, calendars? I have office suite applications. Translating desktop software gives decreased performance with the ability to easily collaborate and access documents from any location that has Internet access.

There are very few web applications that solve a problem that desktop software never did well. They add real value to a user’s life in a way that is new and innovative. Desktop software never handled music discovery (last.fm) or photo sharing (flickr and now Facebook) as well as their web counterparts. Too many web applications are social for no reason or offer solutions without a problem to solve. As my blog friend Steven says:

Adding value to one’s personal pool of knowledge or giving to another’s doesn’t depend on vast numbers of useless contacts. Value comes from one to one communication and then following whatever paths that come from that conversation.

Bonus: The Yahoo Mash Report Card

Last weekend I had a chance to check out Yahoo’s “we were too cheap to buy Facebook, let’s get that egg off of our face” entry into the social platform war with Yahoo Mash. The experience inspired this post. How did Yahoo Mash rate?

+1 point for creating approximately 2 hours of ‘I want a beta invite!’ buzz
+2 points for convincing me that Mash invites had some value and I could earn some social capital by sending invites to everyone on my address book
-10 points for refusing to send my handcrafted invitation that explained what Mash is and why I was sending out invitations
-20 points for sending that ‘engtech created a profile for you!’ spam instead of my custom invitation
-3 points for being ugly
-2 points for not having any utility beyond creating a profile
+2 points for the ability to edit other people’s profiles — something different
-4 points for not leveraging all the other Yahoo services I use
+5 points for introducing me to Yahoo Avatars — much cooler than Mash

This is an exciting time because unlike traditional software that runs on your computer [1], web applications are created as social software where you have a friends list, collaborate on a document with multiple people and it is easily to share information and communicate. The downside is these networks consume a lot of attention and too much time is wasted building profiles and adding friends — for some of these sites building a profile and adding friends is the only utility they have.

Brad Fitzpatrick touches on this with his social graph problem — we need a way of moving our social network around with us as exportable and importable data. Read/Write Web has an overview of the issues behind the social graph problem. Companies like Facebook and MySpace capitalize on the network effect — the more of your friends who utilize the site, the more useful the site is to you — while Plaxo is one of the companies who are targeting the problem of creating a portable social network you can use on any web site.

There are two fundamental problems with using social web apps. The first is the lack of a unique identifier on the web — you know who you are but there is no way for two websites to know that you are the same person. Email addresses are one way to solve this problem. OpenID is another way to solve the problem of identity on the Internet, but it is fraught with it’s own issues such as too many providers / not enough consumers, who owns your OpenID and how trivial it is for someone to steal your OpenID authentication through phishing. OpenID is better than captcha for leaving web comments, but I wouldn’t trust it with my credit card information.

If you’re a new social software company then it’s hard to attract users because of all the incumbent sites who already have their attention; if you’re an old social software then it’s hard to keep users because so much of the initial addiction comes from adding friends. (Not that they’re really your friends, but you know what I mean)

Tomorrow I’ll explain the techniques used to promote a social web applications [2].

UPDATE 2006/11/09: Mike-o-matic has a nice writeup on the same subject.

I remember how when reddit started, the whole thing seemed so childish.

The cartoony alien, the barebones design, the fresh-faced programmers, the rented house. And none of that has really changed. It’s just that with success behind it, it’s harder to dismiss. A scribbled drawing a kid hands to you is “cute”, the same thing on the wall of a museum is “art”. You assume there must be something there, even if you can’t see it.

It’s hard to notice this when you’re in the middle of it. During the days, I mostly saw my co-workers, who lived and breathed the site. At night, I hung out with my friends, who all knew what I did. On weekends, we’d go to parties for local startups, who all wanted to emulate reddit’s success. Everyone we talked to treated us like it was serious.

Paul Graham has an essay on the 18 reasons why start-ups fail. I especially like how he sums it up to a single sentence: “In a sense there’s just one mistake that kills start-ups: not making something users want.”

These are all very valid reasons, and my favorite is Hiring Bad Programmers. Unfortunately it is quite often the only option. If you’re applying “Just in Time” hiring, the candidates you are looking at may be the only choice available. One way to avoid the permanent hit of a bad coder is to hire them on contract with the possibility of giving them a full time position in the future. Giving them an expiry date gives you an easy out, but you’ll still be accruing technical debt the time they are with you.

A small case study on viral. I write an article about a web service called ScheduleWorld because it can do something I want to do: synchronize all my apps with Google Calendar. The owner and I were no way involved before I wrote about it. I wanted to do something, found his site by search, found it could do what I wanted, and wrote a guide about it as link bait for my blog.

Guy Kawasaki covers one of the most basic premises that all engineers forget about: distribution channels. We get our heads down and so focused on getting these things out of the fab bug free (for hardware, software is more flexible), that we might forget things like “do we have an operations team?” and “why would a Huge Market trust someone little like us?”.

Read/Write Web has an article called the Social Bookmarking Faceoff where they compare several start-ups that do social bookmarking (but they aren’t the first). I didn’t read it. You don’t need to read it either. Why? Because the stats speak for themselves:

It looks like Cambrian House is doing pretty well with their concept of Crowded-source Software. They already have several products developed.

One of the products is an online computer to computer fighting game called Gwabs. I’m impressed with how rapidly they go from idea to development. I decided to spend the $9.95 and support them (hey, they gave me an X-Box and a t-shirt). The pre-order deal looks pretty good, as it gives you an unlimited free play account, plus a pimp cane. Talk about knowing your demographic.

One of my favorite comments is when he talks about having a great programmer on the team who is busy building infrastructure when they're trying to ship a 1.0 product. Whether or not the product exists will be the sole thing that defines if the company will still be around in the future, and you really have to wrap your head around the "do it right, but do it fast" no frills mentality. Which, if you think about it, is a better way of working in general. How much extra work do you generate for yourself? Things to think about.

1.0 is developing the first version of a new product. It's what all those start-ups are busily doing right now. They're working on some 1.0 idea that's good enough that a handful of bright people will forgo their lives in support of the chance of being right… SEE, we had a great idea… We're bazillionaires and we were right.

The Rands 1.0 Hierarchy is an upside down pyramid of Product, Process, People and Pitch that can topple at any moment.

Pitch – the Great Idea

Fact #1: You're in a hurry. You're a fool if you think you have exclusive rights to your pitch.

People – the people to build 1.0 but more importantly your engineering culture

Fact #2: No one is indispensable. A great way to topple your fledging pyramid is to hire folks who are not getting the product done with a sense of urgency. Get 1.0 done and then worry what's next.

Process – how things are done

Fact #3: Process defines communication. It doesn't have to be good, it doesn't even have to be universally agreed upon on, it just has to be stuck in a place where every can see it.

Fact #4: Each layer shapes and moves those near it. If your pyramid is not constantly adjusting to keep itself upright something's wrong.

Product – something to give to a neutral party

Fact #5: You don't have a company until you have a product. This state of constant change is the leading cause of start-up burnout and it's also the reason you've got to get that product out. The perspective of the neutral party is essential validation because you're nuts.

Fact #6: The lower the failure, the higher the cost. If the pitch is wrong then you're screwed.

Fact #7: What you're really building in 1.0 is a lasting, interesting culture which, if you're lucky, continues to produces great products.